The Federal Retirement Thrift Investment Board (FRTIB) issued a final rule on July 9, 2025, amending the reamortization process for loans from the Thrift Savings Plan (TSP). The rule combines accrued interest and outstanding principal into a single amount for repayment when a federal employee reamortizes their loan, typically due to changes like shifting from biweekly to monthly payroll or returning from non-pay status (e.g., military service or extended leave). Previously, accrued interest had to be paid before principal. The change aligns TSP procedures with its record keeper’s processes and affects about 1% of TSP loans. Despite opposition from all six public comments, citing concerns over compounding interest and potential higher rates, FRTIB clarified that all repayments go directly to the participant’s account, no additional fees are charged, and the original loan terms, including interest rates, remain unchanged. The rule follows a 2022 regulation limiting reamortization to specific circumstances like pay cycle changes or non-pay status.
https://www.govexec.com/pay-benefits/2025/07/retirement-investment-board-finalizes-new-debt-formula-rule-certain-thrift-savings-plan-loans/406584/
